A New Approach in Business

A New Approach in Business in the UK

The UK economy has been through five revolutions in the twentieth century which have transformed its basic structure and method of functioning. First, the organizational revolution led to an increase in the number, size, and power of organizations of all types.

Second (and an aspect of the organizational revolution), the corporate revolution expanded the scale of business enterprise and led to the dominance of the modern big-business corporation. Third, the managerial revolution saw the emergence of a class of professional managers who took over the active control of large corporations.

Fourth, the property revolution separated ownership and management and diffused property rights within the corporation. Finally, the capitalist revolution brought about a change in the moral order of capitalism and greatly enlarged the public role of business and the economic role of government.'

These economic revolutions have altered the basic nature of the UK economy to such a degree that many of the older theories about the company and the manager are now obsolete.

Companies are supposed to have no function other than to produce goods and services, but modern corporation`s aid in financing education, help make foreign policy through their international operations, provide managers and workers with social status, and perform many other social functions.

Businessmen are supposed to be interested only in making the largest possible profit, but most big-business managers have a strong sense of public responsibility and many of them use their power and influence to pursue broad social goals. Economic activity is supposed to be controlled by competitive forces in the market, but political influences frequently are more important. what is IR35

In this changed social and economic environment, the focus of business ethics is not upon the honesty and personal foibles of businessmen so much as it is upon the relationships between the corporation, management, and society.

The company is an autonomous institution in the sense that it is not government-run, but in carrying on its everyday affairs it is expected to further human values and serve the national purpose. Which functions it should perform in achieving these ends and how they ought to be performed, rather than matters of ordinary honesty and fastidiousness, are at the core of business ethics today.

Ethics presents a problem for many managers today. They are concerned about the ethical consequences of their actions because they are uncertain which ends the enterprise should pursue and which means should be used to attain these ends. If managers had no discretion in these matters, there would be no ethical problem.

But since they do control the destinies of the corporations which they manage, it matters very much which alternative courses of action they decide to carry out. Managers realize that because of the enormous economic and social power which they possess they cannot help but play a key role in determining the directions taken by the rapidly changing UK society.

They want to use their power wisely and in the best interests of all concerned, but they are not sure how to do this.

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Suppose a decision must be made whether or not to move a branch plant from a small town in which it is the economic mainstay to another area where production costs are lower.

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Whichever decision is made will have differential effects on the various groups involved. If the move is made and production costs are appreciably lower, profits may go up and lead to higher stockholder dividends; hourly earnings of workers may go up because of increased productivity; and customers may get a better product, a lower price, or both.

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On the other hand, the small town may become economically stagnant, and workers who are well settled in the town may face the choice of dislocation (and perhaps a cut in wages) or loss of job.